Insurance is a form of risk management primarily used to hedge against the risk of a contingent loss, and may be defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. An insurer is a company that sells insurance. An insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage.
Vehicle insurance is insurance purchased for cars, trucks, and other vehicles. It may provide protection against losses incurred as a result of traffic accidents, fire, theft or attempted theft, vandalism, weather, etc., and against liability that could be incurred in an accident. Vehicle insurance may cover the insured party, the insured vehicle, and third party vehicles and people.
Estimated miles driven on the vehicle, such as annual miles driven, is a factor that is used to determine the premium for vehicle insurance. It is difficult to adjust the premium when the annual miles driven changes abruptly or significantly, such as when a user alters their driving habits because of the price of gasoline, the fuel efficiency of their vehicle, a change in employment, etc.